The Indian financial press has widely reported the Mastercard
Centres of Commerce 2007 study that listed Mumbai among the top 10
cities in the world in terms of financial flows ahead of Hong Kong and
Shanghai. Many of these reports did not mention that despite faring so
well on this sub index, Mumbai ranks 45th out of 50 in the overall
index of global centres while Hong Kong ranks 5th.

Mumbai ranks high only in the financial flows sub index while
ranking near the bottom (below 40) on all other components. Even
within the financial flows sub index, Mumbai owes its place primarily
to the vibrant equities market. (Measuring derivative activity in
terms of number of contracts also helps since the single stock futures
contracts popular in India have small contract sizes.) Even then, the
gap separating Mumbai (38.71) from Shanghai (38.30) and Hong Kong
(38.06) is quite low compared to the gap that separates Mumbai from
Seoul (53.00) or Tokyo (53.39).

The Mastercard study serves to remind us that the equity markets
are the real success story in Indian financial sector reform. We do
need to replicate this success in other sectors.